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Municipal workers in Jeannette face possible layoffs as city council members wrestle with a 2013 budget deficit that could exceed $500,000.

Council members in the Westmoreland County community are working to revise this year's spending plan in an effort to stave off bankruptcy or state supervision of its finances.

The city needs to make both an overdue $350,000 contribution to the police pension fund and a court-ordered payment of $235,000 to a city property owner and his lawyer. Common Pleas Court Judge Richard McCormick Jr. last month gave businessman Frank Trigona $77,000 in damages for lost rent and ordered the city to pay his lawyer, Robert Lightcap, $158,000 in legal fees.

Mr. Trigona sued after Jeannette officials refused to give him occupancy permits, because he owed back taxes. The city in 2005 had passed the no-permit ordinance in 2005, but the law was found to be unconstitutional by county and appeals courts.

More problems lie ahead as the community and the union representing its police head to arbitration over a new contract. "If a large increase is granted, it, too, will have a dramatic effect on the budget," city solicitor Scott Avolio said last week.

The budget originally passed by council totaled about $5.1 million. Bill Bedont, chairman of council's finance committee, said that number could rise as high as $5.6 million as a result of the additional expenses the city faces. Major budget changes are likely to be adopted in the next few weeks, Mr. Bedont said.

Jeannette, long known as the Glass City, has a population of about 9,600. That number is well below its 1960 population of 16,600.

In an effort to right its finances, Jeannette has been part of Pre-Act 47 Early Intervention Program for several years. Participation in that program is designed to help the city avoid being declared distressed and having its finances placed under state supervision. Act 47, the Financially Distressed Municipalities Act, gives the state Department of Community & Economic Development broad powers over local budgets while it offers municipalities opportunity to restructure debt.

The best known community in the program is Pittsburgh. Other southwestern Pennsylvania municipalities under its protection include Aliquippa, Altoona, Braddock, Clairton, Duquesne and Homestead.

Mr. Bedont said the community is working on a multipronged approach to solving the city's budget woes. Possible elements include selling city assets including a little-used fire truck, layoffs, service cuts and fee increases.

Council has asked department heads for lists of equipment that could be sold to raise cash, Mr. Bedont said.

The city employs 37 people, and 33 of them are covered by union contracts. The police force represents the largest group of workers. They include Chief Brad Shepler, a dozen full-timers and three part-time officers.

In case of layoffs, seniority rules require that part-timers and newer hires be let go first. The result would mean the community's highest-paid officers would remain on the payroll. The top compensation for one of Jeannette's police officers, including overtime, was $92,000 in 2012, according to the city.

"Nobody ever wants to see layoffs," Mr. Bedont said. Council is looking into the idea of "rolling" furloughs. Different, small groups of workers would be laid off for rotating periods of two weeks to a month. "If we can save enough money with rolling layoffs, we could try that," Mr. Bedont said. "We are running numbers for all kinds of scenarios."

The city last fall adopted an ordinance that requires property owners to buy and use city-issued plastic bags for their non-recyclable trash. "We're doing as much as we can to make up the revenues that we need," Mr. Bedont said.